The rolls industry, which is largely driven by the steel industry, continues to be under immense pressure both in terms of volume and realisation. The weak economy during the last year is expected to further the adverse effect on the roll industry going forward. During the Financial Year 2012-13, the liquidity position of the company was fragile due to lower off take and sluggish economy and the company faced a major challenge in managing adequacy of working capital as well as its variable costs.

Forged Roll and Engineering Forgings have provided the company with an opportunity to explore newer markets, which may isolate it from the volatility of the steel industry. The company is currently relooking at options to restructure its businesses.

The key highlights during the year are shown below:

in '000 tonnes

FY 13

FY 12

Change %

Rolls Production

8.1

7.3

11

Rolls Sales

8.1

7.2

13

Pig Iron Production (conversion)

25.6

12.2

110

Pig Iron Sales (conversion)

23.8

10.7

122

Ingot production

5.3

1.9

179

Ingot Sales

1.4

1.3

8

8. Tata Steel Processing and Distribution Limited

in Rs. crores

FY 13

FY 12

Turnover

1,643

1,864

Profit/(loss) before tax (PBT)

60

81

Profit/(loss) after tax (PAT)

41

55

Tata Steel Processing and Distribution Limited (TSPDL) is the largest steel service centre in India with a steel processing capacity of around 2 million tonnes. It has eight steel processing units and several distribution locations across the country.

During the year under review, the company, being a dominant player in auto steel servicing, got adversely affected by the slowdown of the economy at large, particularly that of the auto sector in the Financial Year 2012-13. The auto sales of major manufacturers in the Financial Year 2012-13 were at its lowest levels as compared to its past. However, the company, retained its share of business with the key customers, despite the shrinkage in the market. The company also took various operational and financial initiatives to reduce its fixed and financing costs and also enhanced its product mix and net margins. These measures helped in mitigating to a great extent the adverse impact on the bottom line of the company.

Different units of the company received reputable accolades, notable amongst which are:

TSPDL Pune has been ranked the Best Service centre among all India distributors at the ACE+ awards 2012.

The Tinplate Company of India Limited (TCIL) is the largest indigenous producer of tin-coated and tin-free steel sheets in India, manufacturing various grades of electrolytic tinplates (ETP) and tin-free steel (TFS) sheets used for metal packaging. TCIL has also been 'value-adding' its ETP/TFS products by way of providing printing and lacquering facility to reach closer to food processors/fillers.

The company had completed the commissioning of its second cold rolling mill in the Financial Year 2011-12 with the objective of producing the required feedstock for full utilisation of the tinning lines. Consequently, the overall production from the two cold rolling mills for the Financial Year 2012-13 was at 323k tonnes, 22% higher than the Financial Year 2011-12 production of 264k tonnes. The tinning lines production at 310k tonnes during the Financial Year 2012-13 was also 21% higher than the Financial Year 2011-12 production of 256k tonnes.

The turnover of the company increased by 39% on the strength of increased conversion volumes and higher export volumes. The Profit after tax increased by 65% primarily on account of increase in volumes as well as lower input costs.

10. Tata NYK Shipping Pte Ltd.

in Rs. crores

FY 13

FY 12

Turnover

1,091

698

Profit/(loss) before tax (PBT)

(125)

(114)

Profit/(loss) after tax (PAT)

(125)

(114)

Tata NYK Shipping Pte Ltd., a 50:50 joint venture between Tata Steel Ltd., India and NYK Line, a Japanese shipping major was incorporated to cater the growing sea-borne trade for the Tata Group and the Indian markets.

The company has diversified, high performance, environment friendly Japanese and Korean built vessels. The Company has a current fleet size of 23 ships (5 owned and 18 chartered).

Despite low shipping indices in the recent past and very difficult market conditions, the company registered a growth of 50% in the cargo carriage (16.8 million tonnes in the Financial Year 2012-13 as compared to 11.2 million tonnes in the Financial Year 2011-12). On the same lines, revenues were higher by 56% in Rupee terms (higher by 38% in USD, being the functional currency of the company). This was primarily due to the commencement of long term cape business with Tata Group companies during the current year. However, due to the challenging shipping market in the short term, the company incurred losses on the supramax operations, resulting in an overall loss of Rs. 125 crores during the Financial Year 2012-13 as compared to a loss of Rs.114 crores in the Financial Year 2011-12.

11. Tata Sponge Iron Limited

in Rs. crores

FY 13

FY 12

Turnover

798

636

Profit/(loss) before tax (PBT)

126

112

Profit/(loss) after tax (PAT)

85

76

Tata Sponge Iron Limited (TSIL), a manufacturer of sponge iron and producer of power is located at Joda, Odisha. During the Financial Year 2012-13, the company registered a growth of 33% in production volumes due to an improvement in the supply of iron ore.

In the Power business, the company achieved a generation of 178.92 million kwh of power in the Financial Year 2012-13 as compared to 134.39 million kwh in the Financial Year 2011-12. The sale of surplus power during the Financial Year 2012-13 was 123.81 million kwh as compared to 88.31 million kwh in the Financial Year 2011-12. The increase in generation and sale of power is primarily on account of higher operating days of sponge iron kilns. TSIL was an associate company of Tata Steel till the Financial Year 2011-12 and became a subsidiary with effect from 28th August, 2012.

III. Strategy

Tata Steel's strategy development and deployment has been aligned to its vision of becoming a global steel industry benchmark in value creation and corporate citizenship. In the Financial Year 2012-13, the Company faced several challenges due to external market conditions as the key segments of automotive and capital goods were faced with slowdown and the performance of the Indian economy declined substantially during the year. The Company also faced challenges on account of volatile exchange rates and demand slowdown in the economy.

Tata Steel's strategy of improving operational excellence through focused improvement initiative achieved a savings of Rs. 1,625 crores against a plan of Rs. 1,324 crores in the Financial Year 2012-13. Its flagship initiative 'KVHS' (Kar Vijay Har Shikharconquer every peak) contributed Rs. 1,057 crores in the Financial Year 2012-13.

Tata Steel, in the Financial Year 2012-13, also continued its focused improvements in the quality of products and services.

The Corporate Quality Assurance system has brought about a steep improvement in quality as it integrated the divisional quality assurance systems which had been in existence and delivering value to the customers. Customer claims from existing facilities have shown significant reduction in the Financial Year 2012-13.

In line with Tata Steel Group's vision of being a global benchmark in value creation and corporate citizenship, Tata Steel Europe has defined its own vision that is tailored for the European business environment; namely: "To be the long-term preferred partner in our chosen markets by unlocking the potential of steel." As part of the vision, TSE has identified five key strategic priorities:

Customer focus

Single sales and marketing function with particular industry focus on automotive, construction, lifting and excavating, and energy and power.

Jointly funded with the Royal Academy of Engineering a new chair for research into low carbon materials technology at the University of Warwick.

Implementation of a Project and Portfolio Management Tool known as 'Trakker' for managing Tata Steel's new product development stage gate process and putting in place regular monthly reviews. In January 2013, TSE won the Innovation Award from CA Technologies for the use and further development of the 'Trakker' Portfolio Management Tool.

Operational excellence

Alignment of industrial footprint with market conditions.

Upgradation of plants with the aim of improving asset performance and cost competitiveness. To this end, some of the more significant initiatives underway are:

The steelworks at IJmuiden, the Netherlands, is implementing a five-year improvement programme, which is designed to maintain the plant's position as a world-class steelmaker. The focus will be on three goals: further enhancing product quality, improving reliability and reducing costs. As a consequence, IJmuiden's annual effective capacity will rise from 7.2mt to 7.7mt of liquid steel.

TSE has restarted its second blast furnace at the Port Talbot steelworks in the UK following the completion of a rebuild project. The state-of-the-art new furnace is more efficient and will allow Tata Steel to continue to meet the demanding requirements of UK and European manufacturing industry.

The restructuring of the Scunthorpe, England site was announced in May 2011 and implemented according to plan over the following 10 month period.

Investment in the production of 108m long rail at Hayange was completed during the year assuring the sites continued position as a top class rail manufacturer.

Responsible behaviour

TSE aims to act responsibly towards the environment, the communities within which it operates and its employees' safety.

Leading contributor to the European Ultra Low CO2 Steelmaking ('ULCOS') collaborative project.

Proposed new cooling system in the Port Talbot BOS plant which would reduce the site's need for external power by about 15%.

People

TSE is committed to its people who are instrumental to its success. In managing its people, TSE focuses on three strategic building blocks:

Engaging employees at all levels of the organisation.

Developing the capability of the workforce through training and recruitment targeted towards filling capability gaps.

Managing the employment cost base in a responsible manner.

TSE invests significantly in the upskilling and development of its employees. The primary mechanism for delivering this is the Tata Steel Academy, which has been in existence since April 2011.

The Group is thriving towards technological leadership by continuous research and development. Currently about 800 researchers are employed in five technological centres, four in Europe and one in India.

Tata Steel, India continues its expansion projects to maintain and strengthen market share in the growing Indian market. While expanding capacity, Tata Steel India, intends to retain raw material self-sufficiency levels close to the current levels. A detailed section has been included in the 'Directors' Report' on Tata Steel India's most significant expansion and raw material projects.